Avery Dennison Eyes Margin Gains as High-Value Categories Near Half of Sales

Key Points

• High-value categories are becoming a larger growth driver: They generated nearly $4 billion, or about 45% of Avery Dennison’s 2025 sales, and have grown at a high-single-digit rate. The company expects these categories to reach roughly half of revenue by 2030.
• Digital and specialized materials businesses offer expansion opportunities: Intelligent Labels, performance materials, specialty labels, graphics and reflective solutions are targeting growth in areas including food, healthcare, electrification, logistics and automotive.
• Avery Dennison is targeting margin and earnings improvement: Management reaffirmed goals of at least 5% annual sales growth, a 17% adjusted EBITDA margin by 2028 and 10% annual adjusted EPS growth, supported by approximately $8 billion of investment capacity over five years.

Avery Dennison NYSE: AVY used its 2026 High Value Category Investor Showcase to outline how its higher-growth businesses are expected to support revenue growth, margin expansion and capital deployment across its Materials and Solutions segments.

President and CEO Deon Stander said the company generated $9 billion in net sales in 2025, with high-value categories contributing nearly $4 billion. Those categories have delivered high-single-digit growth over the past five years, compared with mid-single-digit organic growth for the broader enterprise, he said. High-value categories now account for roughly 45% of total sales, up nearly 10 percentage points over five years.

Stander said Avery Dennison’s portfolio is supported by sales to less economically sensitive markets including food, beverage, pharmaceuticals and personal care, which account for about 60% of revenue. Emerging markets represent approximately 30% of revenue, he added.

Materials businesses target specialized applications

Danny Allouche, president of the Materials Group, said the segment generates more than $6 billion in sales and derives about 38% of its revenue from high-value categories. He identified performance materials, specialty and durable labels, and graphics and reflective solutions as key growth areas.

Performance materials, a $500 million business that includes industrial and medical tapes, liquid adhesives and sealants, has grown at a mid-single-digit compound annual rate, Allouche said. The company estimates its addressable high-value market at about $20 billion, with mid-single-digit expected market growth. Avery Dennison aims to expand in applications including energy storage, construction, electronics and medical products, while also pursuing bolt-on acquisitions.

Allouche cited the company’s recently launched Terrain artificial-turf adhesive as an example of its product-development strategy. The ready-to-use, single-component product is intended to replace two-part adhesives, reduce site mixing and installation errors, and support heavy foot traffic after six hours, he said.

Mariana Rodriguez, vice president and general manager for Materials Group EMENA, said specialty and durable labels generated $1.2 billion in global sales last year and delivered mid-single-digit annual growth over the past five years. The products serve applications from food and beverage packaging to semiconductors, solar panels, chemical drums and automotive parts.

Rodriguez said the business benefits from demand for food freshness, beverage premiumization, cold-chain logistics, electrification and more durable finished goods. The company is also pursuing growth in pharmaceutical labeling, including light-blocking labels for biologics and RFID-enabled solutions for supply-chain visibility.

Graphics and reflective solutions produced more than $700 million in 2025 sales and grew at a mid-single-digit rate over the past five years, according to Bethany Nock, general manager of Graphic Solutions North America. The company estimates a $4.5 billion addressable market for decorative and functional films used in vehicle wraps, paint protection, architecture, signage and roadway safety.

Nock said Avery Dennison is pursuing automotive aftermarket and original-equipment opportunities, including color-change paint protection films. In reflectives, the company has installed more than 1,000 TrafficJet digital-printing systems globally for road-sign production.

Digital platforms emphasize item-level data and retail execution

Francisco Melo, president of Intelligent Labels Technologies and Digital Solutions, said Intelligent Labels exceeded $900 million in sales in 2025 and has compounded at a low-teens organic rate over the past five years. The business uses UHF or RAIN RFID technologies to provide item-level data for supply chains, traceability and authentication.

The company estimates the addressable market at 350 billion units, with units expected to grow at a mid-teens rate. Apparel remains the largest segment, representing about 60% of unit value, but Avery Dennison is pursuing expansion in food, logistics and general merchandise.

Melo said the company’s food pipeline increased nearly 40% over the past year. Its AD IdentiFresh RFID inlays are designed for food-retail conditions, including high-moisture environments, while its investment in Wiliot supports passive Bluetooth Low Energy applications for condition monitoring.

Vestcom, Avery Dennison’s U.S. shelf-edge solutions business, surpassed $500 million in sales in 2025, according to Vice President and General Manager Ned Peverley. Vestcom serves more than 70 retailers with pricing communication, retail media and electronic shelf-label management services. Peverley said its storeLink software is positioned to coordinate both paper shelf tags and digital shelf labels, while the company also seeks to expand in-store media offerings.

Embelex, the company’s apparel identity and customization business, generated about $330 million of 2025 revenue and grew approximately 10% annually over the past five years, said Michael Barton, senior vice president and general manager of Apparel Solutions. The business provides apparel embellishments, digital experiences and related services. Barton highlighted Custom Studio, an in-venue merchandise personalization system that incorporates RFID-based inventory management.

Financial framework and capital allocation

Chief Financial Officer Greg Lovins said Avery Dennison remains focused on its long-term framework of at least 5% sales growth excluding currency effects, adjusted EBITDA margins of at least 17% by 2028, 10% annual adjusted earnings-per-share growth and top-quartile returns on capital.

Lovins said sales growth has trailed the company’s target because of deflation-related pricing in 2024 and 2025, though volume and mix growth have tracked with expectations. From 2023 through the midpoint of 2026 guidance, the company’s base business has contributed about one percentage point of growth, non-Intelligent Labels high-value categories about two points, and acquisitions about half a point, he said.

Intelligent Labels has grown at a mid-single-digit pace recently because of weaker apparel and general-merchandise conditions and slower-than-expected adoption in food and logistics. However, Lovins said Avery Dennison expects the category’s growth to accelerate over the next two years and reach high-single-digit growth over the five-year cycle ending in 2028.

The company expects high-value categories to rise from roughly 45% of revenue in 2025 to about half of revenue by 2030 through organic growth. Lovins said Avery Dennison has approximately $8 billion of investment capacity over the next five years and plans to continue directing about half of internal capital expenditures toward high-value categories, alongside dividends, potential share repurchases and strategic acquisitions.

About Avery Dennison (NYSE:AVY)

Avery Dennison Corporation NYSE: AVY is a global materials science and manufacturing company that develops labeling, packaging, graphics, and functional material solutions. Its products are used by businesses in industries including retail, apparel, food and beverage, logistics, healthcare, automotive, and industrial manufacturing.

The company's offerings include pressure-sensitive label and packaging materials, graphic films, reflective materials, specialty tapes, performance polymers, and other adhesive products.

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